The Keynesian multiplier effect in a monetary union. Standpoints and outlooks

Thèse de Bachelor , 2021 , 58 Pages , Note: 1,3

Economie politique - Théorie et Politique monetaire

This thesis aims at giving a broad outlook on fiscal discussions and standpoints concerning crises which might occur and ultimately aims at answering the following question: How can financial authorities shape public spending and what are the steps necessary? – Lessons learned from the global financial crisis of 2008.

The Keynesian multiplier process is a concept which was first introduced by Richard Kahn and later on carried further by John Maynard Keynes. This concept was rather simple and very intuitive; if a government increases its spending, the resulting output will increase as well. This became especially relevant in times of crises, when governments were aiming at raising their output. The analysis of how government spending would affect output became omnipresent and there are different standpoints in the literature concerning this, most of them focusing on different aspects, such as the timing of news, spillover effects to other countries, the general environment of the economies and also different model approaches to estimate said multiplier as good as possible and to include as many different determinants as possible.

Table of Contents

List of Figures

List of Tables

List of Abbreviations

List of Symbols

1 Introduction

2 Literature Review
2.1 The Keynesian Multiplier Effect
2.1.1 General Explanation
2.1.2 Foundations and Macroeconomic Groundwork
2.2 State of the Literature
2.3 Concluding Literature Review and Answering Questions

3 Comparison of Countries and Model-Analysis
3.1 Government Spending and Output
3.2 Model Analysis on Different Parameters
3.2.1 Smets-Wouters Model (2003)
3.2.1.1 Benchmark
3.2.1.2 Monetary Policy Reaction Function to Inflation
3.2.1.3 Monetary Policy Reaction Function to the Output Gap
3.2.1.4 Interest Rate Smoothing
3.2.1.5 Beta and the Real Interest Rate
3.2.1.6 Share of Consumption
3.2.1.7 Concluding the Smets-Wouters Model
3.2.2 Del Negro et al. Model (2014)
3.2.2.1 Benchmark
3.2.2.2 Monetary Policy Reaction to Inflation
3.2.2.3 Monetary Policy Reaction to the Output Gap
3.2.2.4 Interest Rate Smoothing
3.2.2.5 Real Interest Rate
3.2.2.6 Share of Government Spending
3.2.2.7 Concluding the Del Negro et al. Model

4 Outlook and Conclusion

5 Appendix
5.1 Country Analysis
5.2 Smets-Wouters Model (2003)
5.3 Del Negro et al. Model (2014)

6 Bibliography

• Université: University of Frankfurt (Main)
• Cours: Wirtschaftswissenschaften
• Note: 1,3
• Auteur: Ole Ohlson (Auteur)
• Année de publication: 2021
• Pages: 58
• N° de catalogue: V1223960
• ISBN (ebook): 9783346655905
• ISBN (Livre): 9783346655912
• Langue: anglais
• mots-clé: keynesian, standpoints